Legislative Report as of 6/30/2020
The Michigan Legislature has gone into a mini-recess that will last for most of the month of July. Before they left Lansing, they passed a supplemental budget bill that will spend approximately $800 million in federal funds the state received from the CARES Act on a variety of COVID-19 related programs. They did not, however, address the shortfall in the current year budget (although an agreement in principle has been reached on that), nor did they present a budget for FY 21 to the Governor. Those issues will have to be addressed in July, August and perhaps even September.
Meanwhile, the Civil Service Commission issued a proposed order regarding state employee unions that would add even more red-tape to labor organizations. The proposed order would require annual reauthorization of payroll deduction for union dues, something that is unnecessarily burdensome and aimed at adding administrative costs to every state-employee union.
The spread of COVID-19 had been dropping fast since May, and Michigan was on the list of states whose numbers were improving the fastest. However, a recent spate of outbreaks across the state has Michigan going the wrong direction again. This has already caused the Governor to delay the announcement of further re-openings, and, if the trend continues, could require more closures.
More details on these stories below.
Governor and Legislative Leaders Reach Agreement to fix Current Year Budget Shortfall
On June 29, Governor Whitmer announced an agreement with leaders of the State House and Senate to address the $2.2 billion shortfall in the FY 2020 budget. The agreement primarily uses federal coronavirus relief funds along with savings from a state employee hiring freeze and use of the Budget Stabilization Fund to bring the current year budget into balance.
Of the $2.2 billion shortfall, $490 million will be made up by “savings achieved through the state hiring and discretionary spending freezes, layoffs, and other identified savings in state government.” Whether those eliminations will come from vacant positions or if the deal will require layoffs of current employees has not been clarified. The deal is being characterized as a “framework,” and some of the details surrounding programmatic and staff cuts will not be finalized until the Legislature returns to Lansing the week of July 21.
The remainder of the massive shortfall will be made up primarily with the use of federal Coronavirus funds, along with $350 million from the Budget Stabilization Fund. Therefore, the deal limits direct cuts to the General Fund to less than $500 million. Still, that is nonetheless a tough pill to swallow for state government.
The final deal will be completed when the Legislature returns from recess in late July. It is also expected that the Legislature and Governor Whitmer will continue to work on an agreement for the FY 20-21 budget this summer. See the article below for more information on next year’s budget.
Legislature will miss July 1 Deadline to Pass FY 2021 Budget
Last year, the Michigan House and Senate waited until nearly the last possible moment to present the FY 2020 budget to Governor Whitmer. With an October 1 deadline for a budget to be signed into law, the Governor received the budget bills on September 27. In response, Governor Whitmer issued an unprecedented number of line-item vetoes, sending shock waves through Michigan while avoiding a government shutdown. This in turn forced further budget negotiations that finally resulted in a supplemental budget bill being adopted in December of last year.
In order to avoid that kind of showdown again, Michigan lawmakers agreed that they would submit the FY 21 and future budgets to the Governor by July 1. This would give ample time for the Governor to reject certain parts of it and negotiate a final budget agreement well before the October 1 deadline. The timeframe is even more important in the School Aid portion of the budget, since school boards across the state need even more lead time to prepare for school years that begin in September.
Unfortunately, the Legislature is not going to meet that self-imposed July 1 deadline. The fiscal and health catastrophe created by the COVID-19 virus has severely hampered lawmakers’ ability to accurately project revenues and necessary expenses for the upcoming budget year. While it appears that the state will be able to balance the current year budget relying primarily on federal Coronavirus relief funds, the question on whether further federal assistance will be made available is far from certain.
Waiting to see if the federal government will provide additional assistance to states is the primary reason for the delay in completing the FY 2020-21 budget. The state is facing an approximately $3 billion shortfall between the General Fund and the School Aid Fund – numbers that are very difficult to address solely with cuts. The kind of reductions to state and public school programs needed are hard to imagine, and they would be politically devastating. However, the only other option – raising taxes – would be a nearly impossible feat with the current makeup of the Michigan Legislature. Caught between a rock and a hard place, Michigan lawmakers are delaying making a decision as long as possible with the hope that the federal cavalry will ride to the rescue.
Civil Service Commission Proposes Rule Aimed at Hampering State Unions
In June, the Michigan Civil Service Commission announced a proposed rule change aimed at adding a great deal of administrative work to state employee unions. The rule would require that members re-authorize the deduction of union dues from their paychecks every year. Currently, once authorization is granted it continues to be in effect until the employee revokes it.
An annual re-authorization requirement serves no purpose other than to create additional paperwork for state employee unions. Members have the ability to leave the union at any time, so the argument that this new rule would somehow “protect” union members is farcical. This proposed rule is merely another attack on the ability of state employees to collectively bargain, and requires that state union resources be needlessly exhausted on unnecessary clerical work.
The current Civil Service Commission is entirely made up of appointees from former Governor Snyder, and they have a very anti-union philosophy. There may be options to challenge the rule in court, and attorneys for labor organizations representing state workers are exploring those. Unfortunately, this attack on the ability of state employee unions to properly represent their members will likely succeed – at least in the short term.